Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Chorus gets reprieve as Adams puts price controls on hold

Chorus gets reprieve as government puts price regulation on hold pending review

By Paul McBeth

Feb. 8 (BusinessDesk) - Telecommunications network operator Chorus has been given some breathing space over price regulation of its ageing copper lines after Communications Minister Amy Adams put the regulator’s plans on hold pending a wider review of rules governing the sector.

The Commerce Commission won't be able to implement cost-based prices on unbundled bitstream access services on Chorus' copper lines until Nov. 30, 2015, while the government embarks on its review and makes any changes, Adams said in a statement. The decision comes after Telecommunications Commissioner Stephen Gale surprised the Beehive when flagging plans to impose a monthly regulated price of $32.45 for UBA, down from $44.98 at present.

What rankled policymakers was that the draft determination seemed to undermine the government's stated aim of rolling out a nationwide fibre broadband network through subsidising Chorus and other partner companies, by making cheaper services on legacy copper more attractive to end consumers.

"Increased certainty around the transition path from copper to fibre will promote development of retail fibre products, boosting the ability of New Zealand homes, businesses, schools and hospitals to maximise the transformative potential of these technologies," Adams said. "One common message I have continually heard from consumers and industry is that they want certainty."

Chorus estimated the decision could shave 40 percent from its annual earnings, and the stock plunged after the announcement last year. The shares were unchanged at $2.86 yesterday.

"From an investor's perspective it's a good outcome," said Shane Solly, portfolio manager at Mint Asset Management. "It's appropriate to take some time to review policy implementation, to slow down and take a holistic approach."

Adams has ordered a review of the Telecommunications Services Obligation and a wider review of the policy framework regulating telecommunications services.

The reviews will focus on long-term interests of consumers, while taking into account market structure, technology developments, competition and network investment, she said. Any legislative changes will be ushered through by the end of this year.

The announcement comes after submissions on the regulator's draft report showed a divide between those investing in the network, including Chorus, and those purchasing services from the company and group's representing end-consumers.

The Telecommunications Users Association said in its submission this week that it was "gravely concerned" over the potential for political interference after the commission had followed the law as it's written, fearing it could undermine the regulator's good work.

The lobby group said Chorus shouldn't have been surprised by the draft decision, with the industry discussing the law at some length in the lead-up.

Wholesale prices for access to the copper lines were averaged as a result of legislation enabling Telecom to carve out its Chorus unit last year, something that annoyed rival telecommunications companies who said it would lift their costs.

At the time of the enabling legislation, Ministry of Economic Development officials downplayed concerns about the impact on copper-line prices, saying it wasn't "deemed significant" and that any increase in UCLL pricing may "have the positive impact of encouraging more investment and innovation on fibre."

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Igniting The Spark: Bringing The Digital Enabler To Life

Changing a name is, relatively speaking, the easy part of a re-invention. Changing a culture, getting all the ducks in a row, turning yourself inside-out to become customer-inspired is a much bigger challenge. More>>

ALSO:

Ebola And NZ: Targeted Screening At Airport But Risk Low

The risk of any cases of Ebola in New Zealand remains very low, but health and border authorities are well prepared... anyone arriving in New Zealand who in the last three weeks has visited countries affected will be screened for symptoms of the disease. More>>

ALSO:

Scoop Business: Brewer Seeking Crowd-Funding Cancels Shareholders’ Dividends

Shareholders in Renaissance Brewing company, the first business to seek equity through crowd-funding in New Zealand, have cancelled their claim on $147,000 of accumulated earnings “to make Renaissance a more attractive investment opportunity.” More>>

ALSO:

It's Spark Now:
Why Telecom Wanted To Change

New Zealand led the world when Chorus demerged from Telecom. It gave us a telecommunications industry structure where the network is completely separated from the products and services it delivers. The changes brought about a new market dynamic and it dramatically changed Telecom’s role. More>>

ALSO:

Glass Half Empty: Dairy Prices Fall To Lowest Since 2012

Dairy product prices slumped to the lowest level since October 2012 in the latest GlobalDairyTrade auction, paced by whole milk powder and cheddar. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news